Option Bull Throws Down $140K on Yahoo! Inc. (YHOO)

Yahoo! Inc. (YHOO) could get hit with bearish analyst attention

Digital Content Group
Feb 9, 2015 at 11:38 AM
facebook twitter linkedin

Yahoo! Inc. (NASDAQ:YHOO) put buying has picked up -- relatively speaking -- in recent months at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, the stock's 50-day put/call volume ratio of 0.30 outranks two-thirds of all other readings from the past year, hinting at a healthier-than-usual appetite for long puts over calls.

This isn't surprising, given YHOO's technical downtrend. Since hitting a 14-year high of $52.62 in mid-November, the security has retreated 18.7% to trade at $42.78.

Despite being down another 0.4% today, YHOO was the target of a massive bullish trade earlier. Specifically, one speculator seemingly bought to open a 23,382-contract block of March 55 calls for $0.06 apiece, resulting in an initial net debit of more than $140,000 (premium paid * number of contracts * 100 shares per contract). This represents the buyer's maximum potential risk, should YHOO settle below $55 at expiration on Friday, March 20. On the flip side, the trader will profit if the stock topples the breakeven mark of $55.06 (strike plus premium paid) within the option's lifetime.

Elsewhere on the sentiment front, the brokerage crowd is very bullish toward Yahoo! Inc. (NASDAQ:YHOO). Seventeen of 24 covering analysts rate the equity a "buy" or better" -- compared to seven "holds" and not a single "sell" -- while its consensus 12-month price target of $57.09 stands in territory not charted since September 2000. If YHOO sustains its downtrend, a round of downgrades and/or price-target reductions could exacerbate selling pressure.


If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!

Schaeffer's Investment Research Master Portfolio Trial


Special Offers from Schaeffer's Trading Partners